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Between Christmas Day and New Years, the Soviets trapped in Suomussalmi, now starving and suffering from frostbite in the icy weather, with inadequate cold weather clothing and low on fuel, staged a desperate breakout from the town across the iced over lake north of the town. A great wave of Red soldiers - though this did not represent the entire force pinned down in Suomussalmi by any means - advanced north over the ice. The last three hard weeks, and the knowledge that they were trapped and in a dire situation indeed, had reduced morale and discipline markedly, so they were little more than a mob. On the icy lake they ran up against a battalion of Finns posted north of Suomussalmi who were busy harassing the traffic on the ice road. The Finns lacked heavy weapons and so were unable to put up much more than token resistance to this great flood of troops, but they still managed to inflict heavy casualties upon them with machineguns and broke up the assault somewhat before pulling back, scattering Soviet units out over the lake. A simultaneous breakout attempt along the road headed north out of Suomussalmi on the western side of the lake, taking what vehicles were still operational with them, fared little better.

One of those groups of Soviets on the lake overran the Finns baggage train, but then, as they were starving, stopped to scavenge what food they could. This proved to be a mistake, as the Finnish supply troops rallied and counterattacked while they ate, killing them to the last man.

The rest of the Soviet troops did manage to get past the lake or up the road, and vanished into the great forests to the northwest, past Linna. There, harried constantly by Finnish patrols, in the cold of the arctic winter, with only the supplies they could carry on their backs, almost none made it out alive, freezing to death en masse, aside from those few who were captured and became POWs.

The remaining Soviets in the town had a bleak future indeed. But all was not lost for them. A fresh Soviet division, the 49th Division, had been sent north into the Suomussalmi area when word had got back of the dire situation the 163rd in Suomussalmi had got themselves into, and it was almost here - another 17,000 soldiers, flooding into the tiny village of Raatevaara on the border.